Seven Reasons to be Cheerful About PR in Asia-Pacific

We are certainly not going to pretend that the Asia-Pacific region was immune to the effects of the global economic crisis. The public relations industry began to feel the impact of the crisis in the second half of 2008, and tough times continued well into 2009, particularly for those in the technology sector and the financial communications business: the mergermarket newsletter reported that global M&A activity was down by 27 percent, and the IPO market was similarly barren.

But it seems that the marketing and corporate communications budget cuts were the result of decisions made by individuals outside the region, and of poor visibility. By the second half of 2009, many of those individuals had been persuaded by their senior people in Asia to loosen the purse strings. For one thing, the aggressive stimulus policy of the Chinese government seemed to be working. For another, companies quickly came to the realization that they were not going to sell more product in North America or Europe, that Asia was their only opportunity for growth.

By the end of the year, China was growing at better than 7 percent, growth in India topped 6 percent, and even Japan seemed to experiencing a surge of optimism.

2. The Rise of Digital and Social Media

The number of active internet users rose in India from 42 million in September 2008 to 52 million in September 2009. And by the end of 2009, the number of Chinese online social media users was around 124 million. Clearly, digital and social media will play an increasingly important part in corporate and marketing communication in Asia. And while many Asians participate in global social media sites, from Facebook and YouTube to LinkedIn, they also have their own networks: Mixi in Japan, Orkut in India, Wretch in Taiwan, and the thriving bulletin board system in China. That means local expertise is required to

reach this huge audience.

But recent research from Burson-Marsteller suggests that Asia-Pacific multinationals are not yet as active in social media as their US or European counterparts: just 40 percent are using Twitter or Facebook to communicate with stakeholders (compared to more than 70 percent in the US and about two-thirds in Europe)—although they are more likely to be using corporate blogs (50 percent of Asian companies, compared to 34 percent in the US and 25 percent in Europe). We have argued elsewhere that the growing importance of digital and social media presents an opportunity for public relations to assume greater responsibility within organizations, in the realms of marketing communications and corporate reputation management. Social media is all about engagement. Effective engagement requires authenticity, openness, integrity, dialogue, listening—all qualities that have always been essential to effective public relations. And there is ample evidence PR firms in Asia are offering a range of sophisticated services, from social media monitoring to blogging to online community building and beyond.

3. Asian Multinationals Going Global

Late in 2008, Hill & Knowlton announced the launch of a new service offering dedicated to helping Chinese companies anxious to improve their international image. Said practice leader Frances Sun:

”Chinese companies are facing a flood of challenges overseas, from product safety and quality concerns to local competition in new markets and different cultural practices. Communications plays a crucial role in informing consumers, business partners, and local governments that Chinese brands have the ability and credibility to meet their needs.”

A few months later, Fleishman-Hillard published research into the New Asian Champions, suggesting that “Multinational corporations based in China, India, Japan and South Korea have unprecedented opportunity to succeed” internationally in the current environment, while suggesting that they faced significant reputational challenges: 35 percent of respondents saw “a lack of profile and branding” as the single greatest weakness of these Asian challengers.

It’s no surprise then that by the end of the year most major international agencies were reporting an increase in the amount of work they “export” from Asia to their global networks, on behalf of clients like China’s Haier, Huawei and Lenovo, or India’s Tata, Infosys and Reliance

4. Growing Wealth in China and India

By 2015, according to a recent McKinsey report, China will have the world’s fourth largest population of wealthy consumers. The number of wealthy households in China hit 1.6 million in 2008 and is expected to reach 4.4 million over the next five years. Moreover, the wealthy Chinese are much younger than their counterparts in other markets: 80 percent are under 45 (compared to just 30 percent of wealthy Americans) and—for now at least—less knowledgeable about foreign brands.

The Indian luxury market, meanwhile, is believed to be worth around $4.5 billion, barely 2 percent of the global market. But India has more than 80,000 millionaires and this number increases by 16,000 every year. India is also the world’s second-fastest growing car market, and is expected to see premium car sales touch the 10,000 mark in 2010. “In this ‘new’ India,” says Edelman’s Ashutosh Munshi, “there are two distinctive consumer segments as far as a luxury consumer brand is concerned: the ‘old rich’ and the ‘nouveau riche.’ Communication to either must be tailored accordingly.”

5. An Aging Population

China currently has 130 million elderly residents, who make up just over 10 percent of the country’s population. But with demographics changing—in part because of the government’s “one child” policy—that proportion is expected to increase to about 31 percent by year 2050. By then, according to one estimate, Asia will be home to almost two-thirds of the world’s over-60s. It’s an issue that has significant implications in many of the region’s major markets, including Japan (where nearly two out of every five people will be 65 years or older in 2050), Singapore, Korea, Thailand, Malaysia, Indonesia, India, and the Philippines.

This presents a massive challenge for regional governments, some of which have already launched public education campaigns (one of which, conducted by Fleishman-Hillard on behalf of the Korean Ministry of Health, Welfare, & Family, won one of our inaugural Asia-Pacific SABRE Awards). For pharmaceutical companies and others in the healthcare space, however, it presents a significant opportunity. Pharmaceutical marketing in the region (with the exception of Australia) has been slow to develop, but the aging population means increased demand for a wide range of treatments.

6. The Rise of Consumer Activism

Activist consumers internationally have demonstrated their ability to cause problems for Asian companies. Greenpeace recently issued a report urging Nestle to stop doing business with companies accused of destroying the Malaysian rain forest—killing endangered orangutans and contributing to global warming. Asia Pulp & Paper has been accused of illegal logging practices in Indonesia and Cambodia, and boycotters persuaded American stationery retailer Staples to stop buying the company’s products. And another forest products company, APRIL (Asia Pacific Resources International) recently announced its

search for a PR agency, in part to ensure it doesn’t find itself making the same kind of

unwanted headlines.

Historically, Asian consumers have been less vocal in their criticism. But that’s beginning to change. In India, protestors have been urging Coca-Cola to close down a factory that locals say is taking muchneeded water. A McDonald’s ad featuring Tibet monks caused a crisis in China just before the Olympics. And while western multinationals are more likely to be targeted, local companies have felt the heat too: there have been protests in Beijing against property developments and in Shanghai against a proposed extension of the city’s magnetic levitation train system.

According to John Russell of Weber Shandwick: “The spread of Chinese prosperity, environmental awareness, activist media and the internet are causing company-community relationships to fluctuate. Firms in China must increasingly explain their operations, related benefits and risks, and the steps they take to minimize risks to local communities. If they do not, their very license to operate can be threatened in the face of hostile communities.”

7. Sustainability and Green Energy

Corporate social responsibility is a major issue in Asia, as it is in the rest of the world, and several major agencies have taken steps to position themselves as experts. Ruder Finn initiated a five-year cooperative program with Tsinghua University in 2008 and has since produced two CSR Index Reports on the FMCG and automobile industries. Edelman, meanwhile, has extended its goodpurpose (CSR and cause branding) research into China, India and Japan: 82 percent of Chinese respondents say it’s unacceptable for companies not to demonstrate concern for the environment, compared to 68 percent globally.

“Companies need to find effective ways to communicate to their stakeholders, both internal and external, what they are doing to be sustainable, and why,” says John Holden, managing director of Hill & Knowlton China. “This is particularly true for international companies operating in China, because they are expected by the Chinese public to apply the same standards of stewardship in China as they do in their home countries. Failure to do so is evidence of a condescending and ‘imperialistic’ attitude, and is punished by consumers quickly and severely.” While failure to address environmental concerns could significantly damage corporate reputation, there’s also an upside to growing interest in green issues.

Already the world’s largest producer of solar panels, and with plans in place to put 60,000 electric vehicles on its roads by 2012 and to become the world’s largest user of wind power by 2013, China is well on its way towards a commanding position in the clean tech space. One report suggests that by 2013 the size of China’s green technology market could be up to one trillion US dollars annually. That’s a significant market opportunity for PR firms.

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